MORESCO Corporation
MORESCO Group delivers sustainable one-of-a-kind products

The 65th 1Q Financial Report（ From March 1, 2022 to May 31, 2022 ）Tokyo Stock Exchange Prime Market 5018 (Petroleum and Coal Products)
July, 2022

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Business environment for the current period (1)Dubai crude oil price$/b

Exchange rate¥/$

130120110

1201001109080

100

7090

60
5080

4070

30

19-1Q

20-1Q

21-1Q

22-1Q
Naphtha Price in Japa

Thousand yen/kL8060
4020
19-1Q

20-1Q

21-1Q

22-1Q

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1Business environment for the current period (2)Car Production in The Area where Our Base is LocatedSource: MarkLines Co., Ltd.

10,000 units

1,400

12.93
million units

12.93
million units

1,200

201

220

1,000

249

247

635

648

156

208

179

20-1Q

21-1Q

22-1Q

800
600

178

252

400

347
200

0Notes:① Japan is from March to May, and overseas is from January to March.
② Southeast / South Asia aggregates Thailand, Indonesia, and India.
(Location of our manufacturing and sales base)

Southeast / South Asia

U.S.

ChainaJapan

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2

Consolidated Income Statement➢ Although sales increased due to the correction of product selling prices,the profit margin declined due to the further rise in raw material prices.
Millions of yen

Account title

21 / 1Q

22 / 1Q

Year-on-year change

Net Sales

6,656

7,050

+5.9％

Gross Profit

2,324

2,053

△11.7％

Selling, General and
Administrative Expenses

1,805

1,852

+2.6％

Operating Income

520

201

△61.4％

Non-operating profit & loss

202271+34.2％

Ordinary Income

721471△34.7%

Extraordinary profit & loss

833－－Income before Income Tax

1,555471△69.7%Net Income *1,095317△71.0%* Net income attributable to owners of parent. The same applies hereafter.

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Changes in Net Sales and Gross Profit Ratio➢ The situation has stopped the decline in gross profit margin
since the previous 2Q.
Net Sales

Gross Profit Ratio

Millions of yen

7,000

6,776 6,770 6,899 6,619
5,884

6,000
5,000

33.1%
31.9% 32.0%

5,464

6,620 6,511

6,656 6,710

34.4%

34.9%

32.3%32.4%

7,049 6,885 7,050

35.0%

33.1%
31.6%

31.1%
29.8%

4,000

40.0%

28.4%

29.1% 30.0%

3,000
2,000

25.0%

1,000020.0%

1Q

2Q 3Q
FY2019

4Q 1Q

2Q 3Q

FY2020

4Q

1Q 2Q

3Q

FY2021

4Q

1Q
FY2022

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4

Breakdown of Sales by Division
Millions of yen

Account title

21/1Q

22/1Q

Year-on-year change

3,083

3,420

+10.9％

Synthetic Lubricants

503

502

△0.1％

Liquid Paraffin &Sulfonates

807

902

+11.9％Hot Melt Adhesive

1,671

1,809

+8.2％

584

417

△28.7％6,648

7,050+6.0％

Rental Building
Business8－－Total Net Sales

6,656

7,050

+5.9％

Functional Fluids

OtherChemical Products
TTL

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Division Performance - Functional Fluids➢ Sales increased by 10.9% year-on-year (3,420 million yen)
Sales volume increased by 2.3％

21/1Q

22/1Q

Millions of yen

1,005 1,027

1,000

829

800

726

670
577600➢The unit price increased due to thecorrection of the selling price.

442380400
214266182 186

2000➢In terms of quantity, the decreasein shipments of die-casting fluid wascovered by the recovery in demandfor vacuum pomp oil and theexpansion of new sales of cutting
fluid.

Vaccum Hidraulicpomp oil
fluid

Diecasting
fluid

Cutting Forging Others
fluidlubricants
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Division Performance - Hot Melt Adhesive➢ Sales increased by 8.2% year-on-year (1,809 million yen)
Sales volume increased by 5.9％

21/1Q

22/1Q

Millions of yen

1,240
1,200

1,113

➢ Sales of sanitary materials
increased due to a recovery indemand in Japan and an increasein shipments in India.

900600331
300208347

222

0Sanitary

Adhesive

OthersCopyright © MORESCO Corporation All Rights Reserved.

7

Overseas Sales (Consolidated)％

Millions of yen

3,000

36.0

37.7

39.1

40

460
2,500

2,000

280
310

246
509

214
511

214
1,500

422

576
1,000

20

586
900

500

616

953

586

00
20/1Q

21/1Q

22/1Q

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8

FY2022 Consolidated Earnings Forecast
Millions of yen

科目2022/1Q

FY2022
Forecast

Progressrate

Net Sales

7,050

30,50023.1％

Operating
Income

201

1,850

10.9％

Ordinary
Income471

2,20021.4％

Net Income

317

1,300

24.4％

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Realization of aSustainable Society

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Sustainability Policy & System to Promote Sustainability➢ MORESCO Group Sustainability Policy
The MORESCO Group,
as a specialist in the interface science stated in its management philosophy,
will actively promote sustainability activities to further contribute to solving social and environmental issues.
We strive to raise the trust of stakeholders by balancing the "realization of a sustainable society"and the "improvement of corporate value throughout the medium
and long term" while operating business.

➢ System to Promote Sustainability
Accounting
Auditors

Audit andSupervisory
Committee

Auditing/Supervision

Board of Directors

Directors on the Audit andSupervisory Committee

MutualCooperation

MutualCooperation

Advisory

Directors
Selection/Dismissal/Supervision

President andRepresentative Director

MutualCooperation

Reporting
Advisory

ReportingDirector andSenior Managing Executive Officer
Internal Audit
Department

Auditing

Management
Committee
Executive directors,
Audit and Supervisory
Committee members,
Executive officers, etc.

Nomination andCompensation
Committee

Compliance andRisk Management
CommitteeExecutive directors,
Audit and Supervisory
Committee members,
Executive officers, etc.

ExecutiveCommittee

Newly
EstablishedSustainabilityCommittee
Executive directors,
Audit and Supervisory
Committee members,
Executive officers, etc.

Individual divisions, departments, and affiliated companies
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11

Seven Materialities (priority issues)➢ Consisting of 5 business activities and 2 internal foundations, we will make steady progress towards 2030.

Critical Issues related tocorporate management

Critical Issues related to business activities

TaskSDGs-Related

The Initiative

Reduce environmental risks

・Develop long-lasting products that generate less wastage with and limiting
impact to the environment
・Establish a “reduce- reuse- recycle” culture at workplace
・Reduce CO2 emissions and wastewater in manufacturing processes
・Develop and deliver eco-friendly products・Invest in and adopt renewable energy sources and implement energy savings practices

Develop innovative products and services

・Invest in innovations and new technologies in existing business to help reduce the costand make them affordable for all
・Identify and develop new business opportunitiesTransform business focusing on long-termvalues for sustainable growth・Create long-term, sustainable impact across employees, customers, suppliers,communities, and shareholders by utilizing data analysis
・Optimize production efficiency and minimize environmental impact using digitaltechnology
・Make the workplace safer by promoting machine automation in the factories andconducting regular safety checks

Supply chain management

・Ensure sustainable and stable procurement of raw materials
・Select suppliers having good socially conscious vision and capability of navigatingchange/disruption
・Reinforce supply chain network and resilience
・Strengthen BCP system

Strengthen business partnerships

・Create innovation through joint research with research institutions, etc.
・Form partnerships with key customers and suppliers for competitive advantages andtechnology advancements
・Co-create values with local communities and promote CSR activities

Strengthen human capital by developing
and promoting diverse human resources

・Develop global talent to meet business needs
・Ensure fair hiring practices and equal pay for equal work
・Promote career advancements for female employees
・Provide career development and leadership training to accelerate the growth of employees

Build a better workplace・Improve employees' work-life balance
・Uphold human and labor rights
・Establish a corporate culture that emphasizes diversity, equity, and inclusiveness (DE&I)
・Ensure competitive compensation and benefits to attract and retain talent・Ensure harassment-free working environment
・Promote Business Process Reengineering (BPR) to make changes for the better
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Initiatives for decarbonization➢ By 2030, we aim to reduce GHG emissions by 46% from our ownenergy consumption (compared to 2013) .
➢ We aim to be carbon neutral by 2050, including our supply chain.

Our CompanyPurchase

ProductionSale

GHG emissions associatedwith the production of raw
materials to purchase

GHG emissions associated withthe use of gas and heavy oil

GHG emissions associatedwith transportation tocustomers

Whole Company
Employee commuting, business trips,
waste disposal, GHG emissions associatedwith electricity use, etc. at all sites

Disposal after product use
GHG emissions

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Initiatives for the Circular EconomyConventional efforts•

Deteriorated additives(20% of the total) areremoved from the old
Water-glycol hydraulicfluid, and the rest isreintroduced into theraw material.

New oil

Extract
reusablecomponents

Used oil✙
Future efforts

Recovered powder

Recycling・Collect and recycle theused powder releasingagent.
・Expand the use of recycled
raw materials as raw
materials for lubricants.

Foreign matter removal
Components adjustment
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Business activities -Realization of environmental risk reduction
Gas & water vapor transmittancemeasurement deviceMulti-chamber type
➢Reduce operator load with multiple sample measurements.
➢Contribute to improving the quality of food and pharmaceuticals bymeasuring the performance of barrier films.
➢We will develop a new measurement device that specializes inhydrogen permeation for fuel cells and contribute to a hydrogen society.

New 4-chamber type device

Performance

New equipment

Existingequipment

Number of samplechambers◎（4 chambers）〇（1 chamber）

Measurement sensitivity〇（～3×10-5）◎（～1×10-6）

Measurement efficiency（10-3 order）◎（4 samples/4 days）〇（2 samples/4 days）Result analysis◎（Easy）〇（Advanced）

Use

Production process
Quality control process

R&D

Application field

Electronic parts/electronicequipment
Food and pharmaceutical packaging

Organic device

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15

Company-internal infrastructure -Achieving a work style thatemphasizes human rights and fulfills both mind and body
Health Management Excellent Corporation 2022
(Large-scale Corporate Division)

Certified for two consecutive years

・This is a system that recognizes corporations that are practicing particularly good health management.
（Ministry of Economy, Trade and Industry）

MORESCO Health Management Declaration
MORESCO believes that physical and mental healthof employees is essential to the sustainable
development of the company. In order to makeHealth Management Promotion System
Health Management

Officer（President and Representative Director）

Director of Human Resources

Industrial Physicians

Human Relations Department

Health Insurance
Associations"a company where everyone can grow in arich environment and cultivate new value"a reality, we are promoting the development ofemployee health.

Public Relations Department

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16Head Office / R&D Center

Kobe City

Kobe AirportForecasts, strategic goals and other forward-looking information in this presentation arebased on the judgements of MORESCO at the time this presentation was prepared. This
information may be revised without prior notice.
Investors are cautioned not to rely entirely on the forecasts and goals in thispresentation when making investment decisions. MORESCO assumes no responsibility
for any resulting losses.
This presentation may not be copied or reused in any other way without the priorconsent of MORESCO.

MORESCO Corporation

https://www.moresco.co.jp/
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17